Table 713 The only four producers in a market have the follo

Table 7-13
The only four producers in a market have the following costs:

Seller

Cost

Abbey

$30

Bev

$40

Carl

$55

Dale

$65

Refer to Table 7-13. If Abbey, Bev, and Carl sell the good, and the resulting producer surplus is $55 altogether, then the price must have been

Select one:

a. $50.

b. $70.

c. $40.

d. $60.

Solution

The price in the market must be \"D\" $60.

When the price is $60, Abbey will get a surplus of $30, Bev will get a surplus of $20 and Carl will get a surplus of $5. A sum total of all the surplus (the difference between the actual price and expected price will be the surplus ) will be $55.